DISCUSSION BOARD THREE
Discussion Board Three
Liberty University
Business 620: Global Economic Prospective
May 29, 2014
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DISCUSSION BOARD THREE
Discussion Board Three
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Marchese (1993) describes how this rigid competition transformed business processes into
strategic approaches, and forced companies to reevaluate their tactics and standards. In turn,
companies began fostering innovation-based cultures where creativity and pioneering ideas were
strongly encouraged (p.12-13). Innovation became a necessity, and companies developed
different strategies for achieving innovative competitive advantages.
Closed innovation. Closed innovation is when a company sustains control in all facets of
the innovation process. Chesbrough (2013) explains how companies that practice this method of
innovation do not use outside sources. Instead, they rely on the research and development
departments to develop innovative ideas and create pioneering products ahead of competitors
within the market. A company’s closed innovation tactics are built around the principles that the
smartest people in the field work for their company, all innovation processes must be
internalized, and they must protect their intellectual property from competitors. In addition, to
win over the market closed innovation companies believe they must be first company to
commercialize, and they must create the most and the best ideas (Dasher, 2009). For example, to
be the best closed innovation companies believe that in order, “…toprofitfromresearch,we
mustdiscover,develop,andshipourselves” (Dasher, 2009). Chesbrough (2013) describes how
closed innovation methods stopped working because of the increasing amount of skilled workers
in the workforce, the growth of venture capital, and the increased availability to outsource
intelligent business partners.
Whatismeantbytheclosedandopeninnovationmodels?Provideexamplesinyour
discussion.
Americancompaniesbeganstronglyfocusingoninnovationwhenforeigncompetition
dominantlytookoverthemarketbyproducinghigherqualityproductsforlowerprices.
DISCUSSION BOARD THREE3
Open innovation. In contrast to closed innovation, open innovation focuses on the
principle that it is critical to recognize the abundant amount of individuals with expertise outside
of the company, and it is valuable to gain their knowledge and insight (Dasher, 2009). In
addition, open innovation methods focus on the concept that developing the best ideas does not
directly correlate to making the most profit. Instead, open innovation is built around the idea that
businesses, “…don’t have to originate the research in order to profit from it, building a better
business model is better than getting to the market first, [and businesses]—should profit from
others’ use of its IP, and should buy others’ IP whenever it advances its own business model”
(Percifield, 2003). Overall, open innovation is a method that focuses on bridging internal and
external resources to develop the most efficient and effective methods for innovation.
Chesbrough (2013) expresses how companies with an open innovation framework believe they
cannot solely rely on their own research because knowledge is so broadly dispersed throughout
the market. For example, these companies will integrate diverse input throughout all stages of the
innovation process such as brainstorming, development, sourcing, manufacturing, and selling.
Comment on the following statement: “A company could produce and sell any product as
long as there is a market for it."
In Where There’s a Demand There’s a Way the author, Brian Jackson, states, “A company
could produce and sell any product as long as there is a market for it." This statement illustrates
the driving force of economics: Demand. To effectively determine demand, companies utilize
forecasting techniques to capture economy conditions and industry trends (Kirman, p. 253,
2006). Through these techniques, a company can discover what products and services are in
demand. Simply put, Jackson’s statement describes the direct relationship between demand and
sales. If individuals are willing to buy a product, then there are also individuals willing to
manufacture it and sell it to them.
DISCUSSION BOARD THREE4
References
Chesbrough, H. (2013) Open innovation versus closed innovation. Center for Open Innovation.
Retrieved from http://www.specialchem.com/open-innovation/closed-innovation.aspx
Dasher, R. (2009, Oct). Understanding innovation models. Stanford University. Retrieved from
http://www.stanford.edu/group/us-atmc/cgi-bin/us-atmc/wp-content/uploads/2009/09/0
90924-dasher402a-part2.pdf
Kirman, A. (2006). Demand theory and general equilibrium: from explanation to introspection, a
journey down the wrong road. Duke University Press. 1(38), p. 252-282. doi
10.1215/00182702-2005-025
Percifield, R. (2003, April 15). The era of open innovation. MIT Management Review.
Retrieved from http://sloanreview.mit.edu/articl/the-era-of-open-innovation/
